Illinois Legislator Introduces Bill to Cap Cigar Tax at 50 Cents

Illinois State Sen. Jil Tracy, R-Quincy, has introduced a bill that seeks to cap the state’s cigar tax at 50 cents per cigar, a change that if passed, would mean a good bit of savings for consumers.

Currently, Illinois taxes cigars at 36 percent of the wholesale price, which means that a cigar with an MSRP of $9.50 ends up costing $12.92, by halfwheel estimates, and before any other taxes are added. With a 50-cent cap in place, that number would go down to $10.50, again by halfwheel estimates, and using a fairly standard model of how retailers assess the tax. The cap would not apply to little cigars.

SB 2036 also provides a 2 percent discount for distributors in their tax liability, up to $2,000 per return.

Over the last decade, other legislators have tried to pass similar bills that would cap the cigar tax, only to see them defeated, generally during committee hearings.

The bill has been referred to the Senate Assignments Committee where it awaits further action. If passed by the Illinois General Assembly and signed into law by the governor, the cap would go into effect on Jan. 1, 2024.